FUEL TECH, INC. (Form: 10-K, Received: 03/05/2009 07:00:43)

(ii) A termination of a Shareholder’s employment for any reason whatsoever at any time on or after January 1, 2011 shall not further reduce the amount of the Annual Earn-out Payment, if any, to be paid for the third Annual Earn-out Period.

(g) Notwithstanding anything to the contrary contained in this Agreement, the Purchaser may, at its option, deduct from the amounts of any Annual Earn-out Payment which may become payable hereunder the amounts of any Losses for which any Purchaser Indemnified Party has submitted a claim under Article 9 of this Agreement, other than a claim pursuant to Section 9.1(b) with respect to a breach of Section 8.8. In the event that it is ultimately determined in accordance with the terms of this Agreement that such Purchaser Indemnified Person is not entitled to indemnification for all or a portion of such Losses, the Purchaser shall promptly pay to the Seller any amounts that had been deducted by the Purchaser under the immediately preceding sentence in respect of the disallowed Losses, to the extent not previously paid together with interest thereon for the period commencing ninety (90) days from the end of the Earn-out Period until the date paid at a rate per annum equal to the “Prime Rate” as published in the Midwestern Edition of the Wall Street Journal from time to time.

(h) Purchaser acknowledges and agrees that, from the Closing Date through the end of the final Annual Earn-out Period, Purchaser shall use commercially reasonable efforts to make all of its products, including those products included within the Earn-out Lines of Business, available to its customers consistent with customer preferences and without reference to whether the sale of such products would affect the earn-out contemplated by this Section 2.8; provided , however , it is further understood and agreed that: (i) the decision whether to purchase any particular product will be made by the Purchaser’s customer, and no breach of this Section 2.8 will be deemed to have occurred based upon any such customer decisions, and (ii) the Purchaser’s obligations set forth above shall be subject, in all cases, to Purchaser’s fiduciary duties under Delaware law.

(i) Purchaser shall conduct the Earn-out Lines of Business post Closing in such a manner as to be able to track all financial matters and related items necessary for calculating the Earn-out due hereunder and, in connection therewith, shall keep true, complete and accurate books of account and records, covering all transactions relating to the subject matter of this Section 2.8 (“Records”). Upon not less than two (2) business days prior written notice, Seller and/or its representative may inspect and copy any of all Records during normal business hours, including, but not limited to, Seller's review of Purchaser’s Earn-out Calculation; provided, however, that the Purchaser shall be entitled to require any of the Seller’s representatives to enter into the Purchaser’s standard form of nondisclosure agreement prior to providing any such Records. Purchaser shall maintain the Records for three (3) years after the expiration of Calendar Year 2011.

Section 2.9 Accounting Disputes.

(a) In the event the parties dispute the determination of the Adjustment Calculation pursuant to Section 2.7 above or any Earn-out Calculation pursuant to Section 2.8 above, as the case may be, the parties shall jointly submit their dispute to a national accounting firm mutually selected by them and with respect to which no party hereto has had any relationship in the past three years (the “Arbitrating Accountant”) for final determination, whose determination shall be made within forty-five (45) days of the date the dispute is submitted to the Arbitrating Accountant; provided, however, that the determination of the Arbitrating Accountant shall be limited exclusively to either determination of (i) the Adjustment Calculation, or (ii) the applicable Earn-out Calculation and related accounting matters, as applicable, and shall not in any manner address the interpretation or legal effect of any other provision of this Agreement. The Arbitrating Accountant shall be permitted to conduct its own independent investigation of the disputed items as well as hear presentations of the disputed items from Purchaser and Sellers’ Representative. In the event of any such dispute, that portion of the Adjustment Calculation or Earn Out Payment, as the case may be, that is not in dispute shall be paid to the Seller at the time and manner provided for herein. The fees and expenses of the Arbitrating Accountant will be shared by the Purchaser and the Seller in proportion to the relative amounts of the disputed amount determined to be for the account of the Purchaser and the Seller, respectively. The Arbitrating Accountant’s determination as to the Adjustment Calculation or any Earn-out Calculation, as the case may be, shall be final and binding on the Parties and shall be enforceable in a court of law .

(b) For purposes of complying with this Section 2.9, the Purchaser and the Seller will promptly furnish to each other and to the Arbitrating Accountant such work papers and other documents and information relating to the disputed items as the Arbitrating Accountant may request and are available to that party and will be afforded the opportunity to present to the Arbitrating Accountant any material related to the disputed items and to discuss the items with the Arbitrating Accountant. The Purchaser may require that the Arbitrating Accountant enter into a customary form of confidentiality agreement with respect to the work papers and other documents and information relating to the Purchaser’s business provided to the Arbitrating Accountant pursuant to this Section 2.9.

Section 2.10 Allocation of Purchase Price and Assumed Liabilities. The Purchase Price and Assumed Liabilities will be allocated in accordance with a schedule to be prepared by the Purchaser in accordance with applicable Law. After the Closing, the parties will make consistent use of the allocation, fair market values and useful lives specified in such schedule for all Tax purposes and in all filings, declarations and reports with the IRS in respect thereof, including the reports required to be filed under Section 1060 of the Code. Within 45 days after the date the Purchase Price is determined, the Purchaser will prepare and deliver IRS Form 8594 to the Seller to be filed with the IRS. Any adjustment to the Purchase Price will be allocated in accordance with Section 1060 of the Code. In any Proceeding related to the determination of any Tax, neither the Purchaser, the Seller nor any Shareholder will contend or represent that such allocation is not a correct allocation.

Section 2.11 Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place at the offices of Purchaser in Warrenville, Illinois (or such other location the parties mutually agree upon in writing) , at 10:00 a.m., local time, on January 5, 2009, or, if all of the conditions set forth in Article 6 have not been satisfied or waived on such date, on such later date as soon as practicable, but in no event later than three business days after satisfaction or waiver of such conditions, or at such other time and place as the Purchaser and the Seller may agree in writing. The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date.”

Section 2.12 Closing Deliveries.

(a) At the Closing, the Seller will deliver or cause to be delivered to the Purchaser:

(i) a bill of sale in the form of Exhibit A (the “Bill of Sale”) executed by the Seller;

(ii) an assignment and assumption agreement in the form of Exhibit B (the “Assignment and Assumption Agreement”) executed by the Seller;

(iii) assignments of all Purchased Intellectual Property in the forms of Exhibits C-1 and C-2 (collectively, the “IP Assignments”) executed by the Seller;

(iv) a certificate in the form of Exhibit D, dated as of the Closing Date, executed by the Seller and by each Shareholder confirming the satisfaction of the conditions specified in Sections 6.1(a) – (e) (insofar as Section 6.1(d) relates to Proceedings involving the Seller or any of its Shareholders);

(v) employment agreements in the forms attached as Exhibit E executed by each Shareholder (each, an “Employment Agreement”);

(vi) a certificate in the form of Exhibit F of the secretary or assistant secretary of the Seller dated as of the Closing Date and attaching (A) the Seller’s charter and all amendments thereto, certified by the Secretary of State of the jurisdiction of the Seller’s incorporation not more than five business days prior to the Closing Date; (B) a certificate of good standing of the Seller certified by the Secretary of State of the jurisdiction of the Seller’s incorporation and each other jurisdiction where the Seller is authorized to do business, each issued not more than five business days prior to the Closing Date; (C) all resolutions of the Shareholders relating to this Agreement and the transactions contemplated by this Agreement; and (D) incumbency and signatures of the officers of the Seller executing this Agreement or any other agreement contemplated by this Agreement;

(vii) following confirmation of the wire transfer to Seller, a receipt for the Initial Purchase Price in form reasonably satisfactory to the Purchaser; and

(viii) such other documents, instruments and agreements as the Purchaser reasonably requests for the purpose of consummating the transactions contemplated by this Agreement.

(b) At the Closing, the Purchaser will deliver or cause to be delivered to the Seller:

(i) the Initial Purchase Price (as adjusted pursuant to Section 2.6) by wire transfer of immediately available funds to the account(s) specified in writing by the Selling Parties’ Representative at least five days prior to Closing;

(ii) the Assignment and Assumption Agreement executed by the Purchaser;

(iii) the Bill of Sale and the IP Assignments, if any, that call for a signature by the Purchaser;

(iv) executed counterparts to the Employment Agreements;

(v) a certificate in the form of Exhibit G, dated as of the Closing Date, executed by the Purchaser confirming the satisfaction of the conditions specified in Sections 6.2(a) – (d) (insofar as Section 6.2(d) relates to proceedings involving the Purchaser); and

(vi) such other documents, instruments and agreements as the Seller reasonably requests for the purpose of consummating the transactions contemplated by this Agreement.

Section 2.13 Consents.

(a) Notwithstanding any other provision of this Agreement, this Agreement does not constitute an agreement to sell, convey, assign, assume, transfer or deliver any interest in any Purchased Asset, or any claim, right, benefit or obligation arising thereunder or resulting therefrom if a sale, conveyance, assignment, assumption, transfer or delivery, or an attempt to make such a sale, conveyance, assignment, assumption, transfer or delivery, without the Consent of a third party would (i) constitute a breach or other contravention of the rights of such third party, (ii) would be ineffective with respect to any party to a Contract concerning such Purchased Asset or (iii) would, upon transfer, in any way adversely affect the rights of the Purchaser under such Purchased Asset. If the sale, conveyance, assignment, transfer or delivery by the Seller to the Purchaser of any interest in, or assumption by the Purchaser of any Liability under, any Purchased Asset requires the Consent of a third party, then such sale, conveyance, assignment, transfer, delivery or assumption will be subject to such Consent being obtained. Without limiting Section 2.13(b), if any Contract included in the Purchased Assets may not be assigned to the Purchaser by reason of the absence of any such Consent, the Purchaser will not be required to assume any Assumed Liability arising under such Contract.

(b) If any Consent in respect of a Purchased Asset has not been obtained on or before the Closing Date, the Seller will continue to use its best efforts to obtain such Consent as promptly as practicable after the Closing until such time as such Consent has been obtained, and to cooperate in any lawful and reasonable arrangement which will provide the Purchaser the benefits of any such Purchased Asset, including subcontracting, licensing or sublicensing to the Purchaser any or all of the Seller’s rights with respect to such Purchased Asset and including the enforcement for the benefit of the Purchaser of any and all rights of the Seller against a third party thereunder; provided, however, that the amount that the Seller shall compensate the Purchaser pursuant to any such subcontract, license or sublicense shall be an “Economically Neutral” amount with respect to the revenue, income, or commission, as the case may be, the Seller receives from the contractual counterparty. “Economically Neutral” is intended to mean (i) the net amount the Purchaser would have received from the contractual counterparty to such Contract if that Contract had been assigned to Purchaser at Closing as contemplated by this Agreement , and (ii) that Seller shall have no out-of-pocket expense in cooperating in such arrangement . Once a Consent for the sale, conveyance, assignment, assumption, transfer and delivery of a Purchased Asset is obtained, the Seller will promptly assign, transfer, convey and deliver such Purchased Asset to the Purchaser, and the Purchaser will assume the obligations under such Purchased Asset assigned to the Purchaser from and after the date of assignment to the Purchaser pursuant to an assignment and assumption agreement substantially similar in terms to those of the Assignment and Assumption Agreement, which assignment and assumption agreement the parties will prepare, execute and deliver in good faith at the time of such transfer, all at no additional cost to the Purchaser. If and when such Consents are obtained or such other required actions have been taken, the transfer of such Purchased Asset will be effected in accordance with the terms of this Agreement.

(c) Nothing in this Section 2.13 will be deemed a waiver by the Purchaser of its right to have received on or before the Closing an effective assignment of all of the Purchased Assets or of the covenant of the Seller to obtain all Consents, nor will this Section 2.13 be deemed to constitute an agreement to exclude from the Purchased Assets any of the Assets described under Section 2.1.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDERS

The Seller and each Shareholder jointly and severally represents and warrants to the Purchaser that as of the date of this Agreement and as of the Closing Date the statements set forth in this Article 3 are true and correct, except as set forth on the disclosure schedule delivered by the Seller to the Purchaser concurrently with the execution and delivery of this Agreement and dated as of the date of this Agreement (the “Seller Disclosure Schedule”):

Section 3.1 Organization and Good Standing. The Seller is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as presently conducted. The Seller is duly qualified or licensed to do business and, where applicable as a legal concept, is in good standing as a foreign corporation in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification or licensure necessary. Section 3.1 of the Seller Disclosure Schedule sets forth an accurate and complete list of the Seller’s jurisdiction of incorporation and the other jurisdictions in which it is authorized to do business, and an accurate and complete list of the Seller’s current directors and officers. The Seller has delivered to the Purchaser accurate and complete copies of the articles of incorporation and bylaws of the Seller, as currently in effect, and the Seller is not in default under or in violation of any provision thereof.

Section 3.2 Authority and Enforceability.

(a) The Seller has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Agreement to which the Seller is a party and to perform its obligations under this Agreement and each such Ancillary Agreement. The execution, delivery and performance of this Agreement and each Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the shareholders of Seller. The Seller has duly and validly executed and delivered this Agreement and, on or prior to the Closing, the Seller will have duly and validly executed and delivered each Ancillary Agreement to which it is a party. This Agreement constitutes, and upon execution and delivery each Ancillary Agreement to which the Seller is a party will constitute, the valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

(b) Each Shareholder has all requisite power, authority and legal capacity to execute and deliver this Agreement and each Ancillary Agreement to which such Shareholder is a party and to perform its respective obligations under this Agreement and each such Ancillary Agreement. Each Shareholder has duly and validly executed and delivered this Agreement and, on or prior to the Closing, each Shareholder will have duly and validly executed and delivered each Ancillary Agreement to which it is a party. This Agreement constitutes, and upon execution and delivery of each Ancillary Agreement to which a Shareholder is a party will constitute, the valid and binding obligation of the Shareholder that is party thereto, enforceable against such Shareholder in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

Section 3.3 No Conflict. Except as set forth in Section 3.3 of the Seller Disclosure Schedule regarding required consents from third parties or Governmental Authorities or required filings with Governmental Authorities, neither the execution, delivery and performance of this Agreement or any Ancillary Agreement by the Seller or any Shareholder, nor the consummation of the transactions contemplated hereby or thereby, will (a) directly or indirectly (with or without notice, lapse of time or both) conflict with, result in a breach or violation of, constitute a default under, give rise to any right of revocation, withdrawal, suspension, acceleration, cancellation, termination, modification, imposition of additional obligations or loss of rights under, result in any payment becoming due under, or result in the imposition of any Encumbrances on any of the properties or assets of the Seller (including the Purchased Assets) under, or otherwise give rise to any right on the part of any Person to exercise any remedy or obtain any relief against Seller or any Shareholder under (i) the articles of incorporation or bylaws of the Seller or any resolution adopted by the board of directors or Shareholders of the Seller, (ii) any Contract to which the Seller or any Shareholder is a party, by which the Seller, any Shareholder or any of their respective properties or assets (including the Purchased Assets) is bound or affected or pursuant to which the Seller or any Shareholder is an obligor or a beneficiary or (iii) any Law, Judgment or Governmental Authorization applicable to the Seller or any Shareholder or any of their respective businesses, properties or assets (including the Purchased Assets) ; or (b) require the Seller or any Shareholder to obtain any Consent or Governmental Authorization of, give any notice to, or make any filing or registration with, any Governmental Authority or other Person, except with respect to clauses (a)(iii) and (b) in any case that would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

Section 3.4 Capitalization and Ownership.

(a) The authorized equity securities of the Seller at the time of Closing will consist of 20,000 shares of common stock, no par value, of which 16,500 shares are issued and outstanding. The Shareholders are and on the Closing Date will be the sole record holders and beneficial owners, free and clear of all Encumbrances, of all of the issued and outstanding equity securities of the Seller. Except as set forth in Section 3.4 of the Seller Disclosure Schedule, there are no Contracts that bind the Seller or the Shareholders to vote, offer, purchase, issue, sell or transfer any securities of the Seller (including voting trusts, proxies, preemptive rights, rights of first refusal, co-sale rights or “bring-along” rights). No holder of Indebtedness of the Seller has any right to convert or exchange such Indebtedness for any equity securities or other securities of the Seller.

(b) The Seller does not own, control or have any rights to acquire, directly or indirectly, any capital stock or other equity interests or debt instruments or securities of any Person. The Seller is not subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any Person.

Section 3.5 Financial Statements.

(a) Attached as Section 3.5 of the Seller Disclosure Schedule are the following financial statements (collectively, the “Financial Statements”):

(i) unaudited balance sheets of the Seller as of December 31, 2006 and December 31, 2007 (the most recent of which, the “Balance Sheet”) and the related unaudited statements of income, changes in Shareholders’ equity and cash flows for each of the fiscal years then ended; and

(ii) an unaudited balance sheet of the Seller as of June 30, 2008 (the “Interim Balance Sheet”) and the related year-to-date unaudited statements of income, changes in Shareholders’ equity and cash flows for the period then ended.

(b) The Financial Statements (including the notes thereto) are correct and complete in all material respects, are consistent with the books and records of the Seller and have been prepared in accordance the past custom and practice of Seller as described in Section 3.5(b) of the Seller Disclosure Schedule, consistently applied throughout the periods involved. The Financial Statements fairly present the financial condition, results of operations, changes in Shareholders’ equity and cash flows of the Seller as of the respective dates and for the periods indicated therein provided, however, that the Interim Balance Sheet is subject to normal year-end audit adjustments (which will not be materially adverse, individually or in the aggregate) and lack footnotes required under GAAP .

Section 3.6 Books and Records. The books of account, minute books, stock record books and other records of the Seller, all of which have been made available to the Purchaser, are accurate and complete in all material respects.

Section 3.7 Accounts Receivable. All accounts receivable of Seller are reflected properly on the Balance Sheet, the Interim Balance Sheet or the accounting records of the Seller as of the Closing Date and represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business. Except as set forth in Section 3.7 of the Seller Disclosure Schedule such accounts receivable are current and collectible, net of the respective reserve set forth in the corresponding line items on the Balance Sheet or the Interim Balance Sheet or on the accounting records of the Seller as of the Closing Date, as the case may be (which reserves have been calculated consistent with the past custom and practice of the Seller). Subject to such reserves and reasonable efforts to collect same , each such account receivable either has been or will be collected in full, without any setoff, within 150 days after the date on which it first becomes due and payable. Except as set forth in Section 3.7 of the Seller Disclosure Schedule there is no contest, claim, defense or right of setoff, other than returns in the ordinary course of business, relating to the amount or validity of such note or account receivable.

Section 3.8 Inventories. All inventories of the Seller are of a quality and quantity usable and, with respect to finished goods, salable in the ordinary course of business. None of such inventory is slow-moving, obsolete, damaged, defective or of below-standard quality, and all of which has been or will be written off or written down to net realizable value on the Balance Sheet, the Interim Balance Sheet or the accounting records of the Seller as of the Closing Date in accordance with the past custom and practice of the Seller. The values at which such inventories are carried reflect an inventory valuation policy in accordance with the past custom and practice of the Seller. The quantities of each item of inventory are not excessive, but are reasonable in the present circumstances of the Seller’s business. Since the date of the Balance Sheet, the Seller has continued to replenish inventories in the ordinary course of business and at a cost not exceeding market prices prevailing at the time of purchase. All inventories are maintained at the facilities of the Seller and no inventory is held on a consignment basis. The Seller does not have any commitments to purchase inventory other than in the ordinary course of business.

Section 3.9 No Undisclosed Liabilities. The Seller has no Liabilities except for (a) Liabilities accrued or expressly reserved for in line items on the Balance Sheet , (b) Liabilities incurred in the ordinary course of business after the date of the Balance Sheet , and (c) Liabilities of the type not required to be reflected or disclosed on a balance sheet prepared in accordance with GAAP (or the notes thereto). The Estimated Closing Balance Sheet, when delivered under Section 2.6, will have been prepared in accordance with GAAP, in a manner consistent with the methods and practices used to prepare the Interim Balance Sheet, and correctly and fairly presents the Estimated Closing Net Working Capital and the other information set forth therein, all in compliance with the applicable provisions of Section 2.6.

Section 3.10 Absence of Certain Changes and Events. Since the date of the Interim Balance Sheet, the Seller has conducted its business only in the ordinary course of business and there has not been any Material Adverse Effect. Without limiting the generality of the foregoing, since the date of the Balance Sheet, there has not been any:

(a) amendment or authorization of any amendment to the Seller’s articles of incorporation, other than to increase the authorized capital of the Seller;

(b) other than as set forth in Section 3.10(a) above, change in the Seller’s authorized or issued capital stock, or issuance, sale, grant, repurchase, redemption, pledge or other disposition of or Encumbrance on any shares of the Seller’s capital stock or other voting securities or any securities convertible, exchangeable or redeemable for, or any options, warrants or other rights to acquire, any such securities;

(d) declaration, setting aside or payment of any dividend or other distribution (whether in cash, securities or other property) in respect of the Seller’s capital stock;

(e) other than loans from the Shareholders, (i) issuance, incurrence, assumption, guarantee or amendment of any Indebtedness, or (ii) loans, advances (other than routine advances to the Seller’s employees in the ordinary course of business) or capital contributions to, or investment in, any other Person, other than in accordance with the Seller’s cash investment policy as described in Section 3.10(e) of the Seller Disclosure Schedule;

(f) sale, lease, license, pledge or other disposition of, or Encumbrance on, any of the Seller’s properties or assets (other than sales of inventory for fair consideration or disposition of damaged or obsolete items and in the ordinary course of business);

(g) acquisition (i) by merger or consolidation with, or by purchase of all or a substantial portion of the assets or any stock of, or by any other manner, any business or Person or (ii) of any properties or assets that are material to the Seller individually or in the aggregate, except purchases of inventory for fair consideration and in the ordinary course of business;

(h) damage to, or destruction or loss of, any of the Seller’s properties or assets with an aggregate value to the Seller in excess of $10,000, whether or not covered by insurance;

(i) entry into, modification, acceleration, cancellation or termination of, or receipt of notice of cancellation or termination of, any Contract (or series of related Contracts) which involves a total remaining commitment by or to the Seller of at least $25,000 outside the ordinary course of business;

(j) (i) except as required by Law, adoption, entry into, termination or amendment of any Seller Plan, collective bargaining agreement or employment, severance or similar Contract, (ii) increase in the compensation or fringe benefits of, or payment of any bonus to, any director, officer, employee or consultant or other independent contractor of the Seller, (iii) amendment or acceleration by the Seller of the payment, right to payment or vesting of any compensation or benefits, (iv) payment by the Seller of any benefit not provided for as of the date of this Agreement under any Seller Plan, (v) grant by the Seller of any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any Seller Plans or Contracts or awards made thereunder or (vi) any action by the Seller other than in the ordinary course of business to fund or in any other way secure the payment of compensation or benefits under any Seller Plan;

(k) cancellation, compromise, release or waiver of any claims or rights (or series of related claims or rights) with a value to the Seller exceeding $10,000 or otherwise outside the ordinary course of business;

(l) settlement or compromise in connection with any Proceeding involving the Seller;

(m) capital expenditure or other expenditure by the Seller with respect to property, plant or equipment in excess of $10,000 in the aggregate;

(n) change in the Seller’s accounting principles, methods or practices;

(o) acceleration or delay in the payment of accounts payable or other Liabilities or in the collection of notes or accounts receivable;

(p) making or rescission by the Seller of any Tax election, settlement or compromise of any Tax Liability or amendment of any Tax Return; or

(q) agreement by the Seller, whether in writing or otherwise, to do any of the foregoing.

Section 3.11 Assets. The Seller has good and marketable title to, or in the case of leased properties and assets, valid leasehold interests in, all of the Purchased Assets, free and clear of any Encumbrances. The Purchased Assets constitute all of the properties and assets used in or necessary to conduct the Seller’s business as conducted and as currently planned to be conducted by the Seller. None of the Excluded Assets is material to the Seller’s business.

Section 3.12 Leased Real Property.

(a) The Seller does not own any real property, nor has the Seller ever owned any real property.

(b) Section 3.12(b) of the Seller Disclosure Schedule sets forth an accurate and complete description (by street address of the subject leased real property, the date and term of the lease, sublease or other occupancy right, the name of the parties thereto, each amendment thereto and the aggregate annual rent payable thereunder) of all land, buildings, structures, fixtures, improvements and other interests in real property that is leased or otherwise occupied by the Seller exclusive of any occupancy by the Seller of customer sites during the course of installations (the “Leased Real Property”). The Seller holds valid leasehold interests in the Leased Real Property, free and clear of any Encumbrances . The Seller has delivered to the Purchaser accurate and complete copies of all leases relating to the Leased Real Property. With respect to each such lease, the Seller has not exercised or given any notice of exercise of, nor has any lessor or landlord exercised or given any notice of exercise by such party of, any option to purchase , right of first offer or right of first refusal to purchase contained in any such lease. The rental set forth in each lease of the Leased Real Property is the actual rental being paid, and there are no separate agreements or understandings with respect to the same. Each lease of the Leased Real Property grants the Seller the exclusive right to use and occupy the demised premises thereunder.

(c) The Seller is in peaceful and undisturbed possession of the Leased Real Property, and there are no contractual or legal restrictions that preclude or restrict the ability of the Seller to use such Leased Real Property for the purposes for which it is currently being used. The Seller has not subleased, licensed or otherwise granted to any Person the right to use or occupy any portion of the Leased Real Property, and the Seller has not received notice, and the Seller has no Knowledge, of any claim of any Person to the contrary.

Section 3.13 Intellectual Property.

(a) The Seller owns or otherwise possesses valid and legally enforceable rights to use the Purchased Intellectual Property. The Purchased Intellectual Property constitutes all of the Intellectual Property used in or necessary to conduct the Seller’s business as conducted by the Seller. Section 3.13(a) of the Seller Disclosure Schedule sets forth an accurate and complete list of all of the Purchased Intellectual Property, other than the Third Party Intellectual Property listed in the Seller Disclosure Schedule pursuant to Section 3.13(c), that is owned by the Seller (the “Owned Intellectual Property”). The Seller is the sole and exclusive owner of the Owned Intellectual Property, has the right to transfer the Owned Intellectual Property as contemplated by this Agreement and has executed no agreement and taken no action in conflict with this Agreement or in derogation of the rights transferred under this Agreement. The transfer of the Owned Intellectual Property to the Purchaser will vest solely and exclusively in the Purchaser valid title to the Owned Intellectual Property, and the full right to use, license and transfer the Purchased Intellectual Property in the same manner and on the same terms and conditions that the Seller had immediately prior to the Closing.

(b) With respect to the Owned Intellectual Property, Section 3.13(b) of the Seller Disclosure Schedule sets forth an accurate and complete list (by name and, where applicable, registration number and jurisdiction of registration, application, certification and filing) of (i) all patents and patent applications, registered and unregistered trademarks and service marks (including Internet domain names) and applications for the same, trade names, corporate names and copyright registrations and applications, indicating for each, the applicable jurisdiction, registration number (or application number) and date issued (or date filed) and (ii) all computer software items (provided the Seller need not separately list licenses of Internally Used Shrinkwrap Software), and identifies all Contracts under which the Seller has licensed or otherwise granted rights in any of the Owned Intellectual Property to any Person.

(c) Section 3.13(c) of the Seller Disclosure Schedule sets forth an accurate and complete list of all Intellectual Property that any third party has licensed or sublicensed to the Seller or otherwise authorized the Seller to use (the “Third Party Intellectual Property”), including a list of the related Contracts (provided the Seller need not separately list licenses of Internally Used Shrinkwrap Software). The Seller has not granted any sublicense or similar right with respect to any such Third Party Intellectual Property.

(d) The Owned Intellectual Property is free of all payment obligations and other Encumbrances and is not subject to any Judgments or limitations or restrictions on use or otherwise. No Person has any rights in the Owned Intellectual Property that could cause any reversion or renewal of rights in favor of that Person or termination of the Seller’s rights in the Owned Intellectual Property. There is no Proceeding, Judgment, Contract or other arrangement that prohibits or restricts the Seller from carrying on the Seller’s business, or any portion of it, anywhere in the world.

(e) All patents and registered and unregistered trademarks, service marks and copyrights included in the Purchased Intellectual Property are valid and subsisting under applicable Law. The Purchased Intellectual Property does not infringe, misappropriate or otherwise conflict with or violate any Intellectual Property rights of any Person, and to the extent the patents included therein are issued, such patents are valid, lawfully issued and enforceable, and to the extent pending, valid, not abandoned and patentable. The Purchaser’s exploitation of the Purchased Intellectual Property, including without limitation, the manufacture, use, offer for sale, sale or importation of any product containing the Purchased Intellectual Property, will not result in infringement of any Intellectual Property Right of any Person, now or hereafter existing, including, without limitation, any patent of any Person, all applications from which such patents claim priority, all continuations, divisions, reissues or other applications claiming priority to any of the foregoing, all patents issuing from any of the foregoing, and all reissues, reexaminations and extensions of the foregoing, in each case anywhere in the world. No event has occurred or circumstance exists that could render any of the Purchased Intellectual Property invalid or unenforceable. The Seller has delivered to the Purchaser accurate and complete copies of all patents, registrations and applications, each as amended to date, included in the Owned Intellectual Property and all other written documentation evidencing ownership and prosecution of each such item.

(f) The Seller has not agreed to indemnify, defend or otherwise hold harmless any other Person with respect to Losses resulting or arising from the Purchased Intellectual Property, except under those Contracts summarized or described in Section 3.13(c) of the Seller Disclosure Schedule.

(g) To the Seller’s Knowledge, no Person has used, disclosed, infringed or misappropriated any of the Purchased Intellectual Property, other than authorized uses and disclosures in accordance with the Contracts described in Sections 3.13(b) and 3.13(c) of the Seller Disclosure Schedule. The Seller has not commenced or threatened any Proceeding, or asserted any allegation or claim, against any Person for infringement or misappropriation of the Purchased Intellectual Property.

(h) The Seller has not received notice of any pending or threatened Proceeding or any allegation or claim in which any Person alleges that the Seller, its business or the Purchased Intellectual Property has violated any Person’s Intellectual Property rights. There are no pending disputes between the Seller and any other Person relating to the Purchased Intellectual Property.

(i) The Seller has taken all commercially reasonable steps necessary to comply with all duties of the Seller to protect the confidentiality of information provided to the Seller by any other Person. Other than as set forth in Schedule 3.13(i), the Seller has not obtained from any of its current and former employees, consultants and other independent contractors with access to Purchased Intellectual Property an executed proprietary information and inventions assignment agreement.

Section 3.14 Contracts.

(a) Section 3.14(a) of the Seller Disclosure Schedule sets forth an accurate and complete list of each Contract (or group of related Contracts) to which the Seller is a party, by which the Seller or any of the Purchased Assets is bound or affected or pursuant to which the Seller is an obligor or a beneficiary, which:

(i) is for the purchase or sale of materials, supplies, goods, services, equipment or other assets, the performance of which extends over a period of more than one year or that otherwise involves an amount or value in excess of $10 ,000 ;

(ii) is for capital expenditures in excess of $10 ,000 ;

(iii) is a mortgage, indenture, guarantee, loan or credit agreement, security agreement or other Contract relating to Indebtedness, other than accounts receivables and payables in the ordinary course of business;

(iv) is a lease or sublease of any real or personal property, (other than personal property leases and conditional sales agreements having a value per item or aggregate payments of less than $10,000 and a term of less than one year);

(v) is a license or other Contract under which (A) the Seller has licensed or otherwise granted rights in any Purchased Intellectual Property to any Person or (B) any Person has licensed or sublicensed to the Seller, or otherwise authorized the Seller to use, any Third Party Intellectual Property (other than licenses of Internally Used Shrinkwrap Software);

(vi) is for the employment of, or receipt of any services from, any director or officer of the Seller or any other Person on a full-time, part-time, consulting or other basis (other than any such arrangements which are not in writing and which are terminable without penalty to the Seller on not more than 30 days’ prior written notice) ;

(vii) provides for severance, termination or similar pay to any of the Seller’s current or former directors, officers, employees or consultants or other independent contractors;

(viii) provides for a loan or advance of any amount to any director or officer of the Seller, other than advances for travel and other appropriate business expenses in the ordinary course of business;

(ix) licenses any Person to manufacture or reproduce any of the Seller’s products, services or technology or any Contract to sell or distribute any of the Seller’s products, services or technology;

(x) is a joint venture, partnership or other Contract involving any joint conduct or sharing of any business, venture or enterprise, or a sharing of profits or losses or pursuant to which the Seller has any ownership interest in any other Person or business enterprise;

(xi) contains any covenant limiting the right of the Seller to engage in any line of business or to compete (geographically or otherwise) with any Person, granting any exclusive rights to make, sell or distribute the Seller’s products, granting any “most favored nations” or similar rights or otherwise prohibiting or limiting the right of the Seller to make, sell or distribute any products or services;

(xii) involves payments based, in whole or in part, on profits, revenues, fee income or other financial performance measures of the Seller;

(xiii) is a power of attorney granted by or on behalf of the Seller;

(xiv) is a written warranty, guaranty or other similar undertaking with respect to contractual performance extended by the Seller other than in the ordinary course of business;

(xv) is a settlement agreement with respect to any pending or threatened Proceeding entered into since Seller’s inception; or

(xvi) was entered into other than in the ordinary course of business and that involves an amount or value in excess of $10,000 or contains or provides for an express undertaking by the Seller to be responsible for consequential damages .

(b) The Seller has delivered to the Purchaser an accurate and complete copy (in the case of each written Contract) or an accurate and complete written summary (in the case of each oral Contract) of each Contract required to be listed in Section 3.14(a) of the Seller Disclosure Schedule. With respect to each such Contract required to be listed:

(i) the Contract is legal, valid, binding, enforceable and in full force and effect except to the extent it has previously expired in accordance with its terms;

(ii) the Seller and, to the Seller’s Knowledge, the other parties to the Contract have performed all of their respective obligations required to be performed under the Contract as of the date hereof ; and

(iii) Neither the Seller nor, to the Seller’s Knowledge, any other party to the Contract is in breach or default under the Contract and no event has occurred or circumstance exists that (with or without notice, lapse of time or both) would reasonably be expected to constitute a breach or default by the Seller or, to the Seller’s Knowledge, by any such other party, or give rise to any right of revocation, withdrawal, suspension, acceleration, cancellation, termination, modification, imposition of additional obligations or loss of rights under, result in any payment becoming due under, result in the imposition of any Encumbrances on any of the Purchased Assets under, the Contract, nor has the Seller given or received notice or other communication alleging the same.

(c) To the Seller’s Knowledge no director, agent, employee or consultant or other independent contractor of the Seller is a party to, or is otherwise bound by, any Contract, including any confidentiality, noncompetition or proprietary rights agreement, with any other Person that in any way adversely affects or will affect (i) the performance of his or her duties for the Seller, (ii) his or her ability to assign to the Seller rights to any invention, improvement, discovery or information relating to the Seller’s business or (iii) the ability of the Seller to conduct its business as currently conducted or as currently proposed to be conducted.

Section 3.15 Tax Matters.

(a) The Seller has timely filed all Tax Returns that it was required to file in accordance with applicable Laws, and each such Tax Return is accurate and complete in all material respects. The Seller has timely paid all Taxes due with respect to the taxable periods covered by such Tax Returns and all other Taxes (whether or not shown on any Tax Return) which are due and payable . No claim has ever been made by a Governmental Authority in a jurisdiction where the Seller does not file a Tax Return that it is or may be subject to taxation by that jurisdiction. The Seller has not requested an extension of time within which to file any Tax Return which has not since been filed. The Seller has delivered to the Purchaser accurate and complete copies of all Tax Returns of the Seller (and its predecessors) for the years ended 2005, 2006 and 2007. There are no liens on any of the assets of Seller that arose in connection with any failure (or alleged failure) to pay Taxes.

(b) All Taxes that the Seller is required by Law to withhold or collect, including sales and use Taxes and amounts required to be withheld or collected in connection with any amount paid or owing to any employee, independent contractor, creditor, shareholder, or other Person, have been duly withheld or collected. To the extent required by applicable Law, all such amounts have been paid over to the proper Governmental Authority or, to the extent not yet due and payable, are held in separate bank accounts for such purpose.

(c) To the Seller’s Knowledge, no Governmental Authority will assess any additional Taxes for any period for which Tax Returns have been filed. No federal, state, local or foreign audits or other Proceedings are pending or being conducted, nor has the Seller received any (i) notice from any Governmental Authority that any such audit or other Proceeding is pending, threatened or contemplated, (ii) request for information related to Tax matters or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted or assessed by any Governmental Authority against the Seller, with respect to any Taxes due from or with respect to the Seller or any Tax Return filed by or with respect to the Seller. The Seller has not granted or been requested to grant any waiver of any statutes of limitations applicable to any claim for Taxes or with respect to any Tax assessment or deficiency. The Seller has delivered to the Purchaser accurate and complete copies of all examination reports and statements of deficiencies assessed against or agreed to by the Seller since 2002.

(d) All Tax deficiencies that have been claimed, proposed or asserted in writing against the Seller have been fully paid or finally settled, and no issue has been raised in writing in any examination which, by application of similar principles, could be expected to result in the proposal or assertion of a Tax deficiency for any other year not so examined.

(e) No position has been taken on any Tax Return with respect to the business or operations of the Seller for a taxable period for which the statute of limitations for the assessment of any Taxes with respect thereto has not expired that is contrary to any publicly announced position of a taxing authority or that is substantially similar to any position which a taxing authority has successfully challenged in the course of an examination of a Tax Return of the Seller. The Seller has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of income Tax under Section 6662 of the Code.

(f) The Seller is not a party to or bound by any Tax sharing agreement, Tax indemnity obligation or similar Contract or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other Contract relating to Taxes with any Governmental Authority).

(g) The Seller is not and has not been a member of an affiliated group within the meaning of Section 1504(a) of the Code (or any similar group defined under a similar provision of foreign, state or local Law) and the Seller has no Liability for Taxes of any other Person under Section 1.1502-6 of the Treasury Regulations (or any similar provision of foreign, state or local Law), as a transferee or successor, by Contract or otherwise.

(h) The Seller has not entered into any transactions with respect to the Purchased Assets that require disclosure under Section 6011 of the Code.

(i) The Seller is not a “foreign person” as defined in Section 1445(f)(3) of the Code.

Section 3.16 Employee Benefit Matters.

(a) Section 3.16(a) of the Seller Disclosure Schedule sets forth an accurate and complete list of all Seller Plans.

(b) The Seller has delivered to the Purchaser an accurate and complete copy of (i) each writing that sets forth the terms of each Seller Plan, including plan documents, plan amendments, any related trusts, all summary plan descriptions and other summaries and descriptions furnished to participants and beneficiaries, (ii) all personnel, payroll and employment manuals and policies of the Seller, (iii) a written description of any Seller Plan that is not otherwise in writing, (iv) the Form 5500 filed in each of the most recent three plan years with respect to each Seller Plan, including all schedules thereto, financial statements and the opinions of independent accountants.

(c) Neither the Seller nor any ERISA Affiliate has ever established, maintained or contributed to, or had an obligation to maintain or contribute to, any (i) multiemployer plan as defined in Section 3(37)(A) of ERISA, (ii) plan subject to Title IV of ERISA, (iii) voluntary employees’ beneficiary association under Section 501(c)(9) of the Code, (iv) organization or trust described in Section 501(c)(17) or 501(c)(20) of the Code, (v) welfare benefit fund as defined in Section 419(e) of the Code, or (vi) a Seller Plan that is an employee welfare plan described in Section 3(1) of ERISA that has two or more contributing sponsors at least two of which are not under common control within the meaning of Section 3(40) of ERISA.

(d) Each Seller Plan is and at all times has been maintained, funded, operated and administered, and the Seller has performed all of its obligations under each Seller Plan, in each case in all material respects in accordance with the terms of such Seller Plan and in material compliance with all applicable Laws, including ERISA and the Code. All contributions required to be made to any Seller Plan by applicable Law and the terms of such Seller Plan, and all premiums due or payable with respect to insurance policies funding any Seller Plan, for any period through the Closing Date, have been timely made or paid in full or, to the extent not required to be made or paid on or before the Closing Date, have been fully reflected in line items on the Interim Balance Sheet.

(e) Each Seller Plan that is a pension plan that meets or purports to meet the requirements of Section 401(a) of the Code (a “Qualified Plan”) has received a favorable determination or opinion letter from the IRS that it is qualified under Section 401(a) of the Code and that its related trust is exempt from federal income Tax under Section 501(a) of the Code, and each such Qualified Plan complies in form and in operation in all material respects with the requirements of the Code and meets the requirements of a “qualified plan” under Section 401(a) of the Code. No event has occurred or circumstance exists that could reasonably be expected to give rise to disqualification or loss of Tax-exempt status of any such Qualified Plan or trust.

Section 3.17 Employment and Labor Matters.

(a) Section 3.17(a) of the Seller Disclosure Schedule sets forth an accurate and complete list of all employees and independent contractors currently performing services for the Seller, including each employee on leave of absence or layoff status, along with the position, date of hire, engagement or seniority, compensation and non-standard benefits, scheduled or contemplated increases in compensation and benefits, scheduled or contemplated promotions, accrued but unused sick and vacation leave or paid time off and service credited for purposes of vesting and eligibility to participate under any Seller Plan with respect to such Persons. To the Seller’s Knowledge, no employee of the Seller intends to terminate his or her employment with the Seller.

(b) Except as set forth on Section 3.17(b) of the Seller Disclosure Schedule: (i) Seller is not, and has not been, a party to or bound by any collective bargaining, works council, employee representative or other Contract with any labor union, works council or representative of any employee group, nor is any such Contract being negotiated by the Seller; (ii) the Seller has no Knowledge of any union organizing, election or other activities made or threatened at any time within the past three years by or on behalf of any union, works council, employee representative or other labor organization or group of employees with respect to any employees of the Seller; and (iii) there is no union, works council, employee representative or other labor organization, which, pursuant to applicable Law, must be notified, consulted or with which negotiations need to be conducted in connection with the transactions contemplated by this Agreement.

(c) Since its inception, the Seller has not experienced any labor strike, picketing, slowdown, lockout, employee grievance process or other work stoppage or labor dispute, nor to the Seller’s Knowledge is any such action threatened. To the Seller’s Knowledge, no event has occurred or circumstance exists that could reasonably be expected to give rise to any such action, nor does the Seller contemplate a lockout of any employees.

(d) The Seller has complied in all material respects with all applicable Laws and its own policies relating to labor and employment matters, including fair employment practices, terms and conditions of employment, contractual obligations, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, workers’ compensation, the payment of social security and similar Taxes, occupational safety and plant closing.

(e) There is no Proceeding pending or, to the Seller’s Knowledge, threatened against or affecting the Seller relating to the alleged violation by the Seller (or its directors or officers) of any Law pertaining to labor relations or employment matters. The Seller has not committed any unfair labor practice, nor has there been any charge or complaint of unfair labor practice filed or, to the Seller’s Knowledge, threatened against the Seller before any Governmental Authority. There has been no complaint, claim or charge of discrimination filed or, to the Seller’s Knowledge, threatened, against the Seller with any Governmental Authority.

Section 3.18 Environmental, Health and Safety Matters.

(a) The Seller is, and at all times has been, in compliance in all material respects with all, and not subject to any Liability under any, Environmental Laws and Occupational Safety and Health Laws. Without limiting the generality of the foregoing, the Seller and its Affiliates have obtained and complied in all material respects with all Governmental Authorizations that are required pursuant to Environmental Laws and Occupational Safety and Health Laws for the occupation of their facilities and the operation of their businesses. An accurate and complete list of all such Governmental Authorizations is set forth in Section 3.18(a) of the Seller Disclosure Schedule.

(b) The Seller has not received any notice, report or other written communication or information regarding (i) any actual, alleged or potential violation of, or failure to comply with, any Environmental Law or Occupational Safety and Health Law or (ii) any Liability or potential Liability, including any investigatory, remedial or corrective obligation, relating to the Seller or any Leased Real Property or other property or facility currently or previously owned, leased, operated or controlled by the Seller arising under any Environmental Law or Occupational Safety and Health Law.

(c) The Seller has not treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, generated, manufactured, distributed, exposed any Person to or released any substance, including any Hazardous Material, or owned or operated any property or facility, in a manner that has given rise to, or could reasonably be expected to give rise to, any Liability, including any Liability for fines, penalties, response costs, corrective costs, personal injury, property damage, natural resources damage or attorneys’ fees, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Solid Waste Disposal Act, or any other Environmental Law or Occupational Safety and Health Law.

(d) The Seller has not, either expressly or by operation of Law, assumed, undertaken, provided an indemnity with respect to or otherwise become subject to any Liability, including any obligation for corrective or remedial action, of any other Person relating to any Environmental Law.

(e) No event has occurred or circumstance exists relating to the operations of, or the properties or facilities currently or previously owned, leased, operated or controlled by, the Seller that could reasonably be expected to (i) prevent, hinder or limit continued compliance in all respects with any Environmental Law or Occupational Safety and Health Law, (ii) give rise to any investigatory, remedial or corrective obligations pursuant to any Environmental Law or Occupational Safety and Health Law or (iii) give rise to any other Liability pursuant to any Environmental Law or Occupational Safety and Health Law, including any Liability relating to onsite or offsite releases of, or exposure to, Hazardous Materials, personal injury, property damage or natural resources damage.

Section 3.19 Compliance with Laws, Judgments and Governmental Authorizations.

(a) Without limiting the scope of any other representation in this Agreement, the Seller is in compliance in all material respects and has complied in all material respects with all, and has not violated in any material respects any, Laws, Judgments or Governmental Authorizations applicable to it or to the conduct of its business or the ownership or use of any of its properties or assets. The Seller has not received any notice or other communication from any Governmental Authority or any other Person regarding any actual, alleged or potential violation of, or failure to comply with, any applicable Law, Judgment or Governmental Authorization, any actual or threatened revocation, withdrawal, suspension, cancellation, termination or modification of any Governmental Authorization, or any actual, alleged or potential obligation on the part of the Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.

(b) Section 3.19(b) of the Seller Disclosure Schedule sets forth an accurate and complete list of all Governmental Authorizations held by the Seller or that otherwise relates to the conduct of its business or the ownership or use by the Seller of any of the Purchased Assets, all of which are valid and in full force and effect. The Governmental Authorizations listed in Section 3.19(b) of the Seller Disclosure Schedule collectively constitute all of the Governmental Authorizations necessary for the Seller to conduct the Seller’s business lawfully in the manner in which the Seller currently conducts its business and to permit the Seller to own and use the Purchased Assets in the manner in which it currently owns and uses such assets.

(c) Section 3.19(c) of the Seller Disclosure Schedule sets forth an accurate and complete list of all Judgments to which the Seller or any of its properties or assets, is or has been subject. To the Seller’s Knowledge, no director, officer, employee or agent of the Seller is subject to any Judgment that prohibits such director, officer, employee or agent from engaging in or continuing any conduct, activity or practice relating to the Seller.

Section 3.20 Legal Proceedings. Section 3.20 of the Seller Disclosure Schedule sets forth an accurate and complete list of all pending Proceedings (a) by or against the Seller, or to the Seller’s Knowledge, that otherwise relate to or could reasonably be expected to affect the Seller’s business, properties or assets, (b) to the Seller’s Knowledge, by or against any of the directors or officers of the Seller in their capacities as such or (c) by or against the Seller that challenge, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated by this Agreement. To the Seller’s Knowledge, no other such Proceeding has been threatened, and no event has occurred or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Proceeding. The Seller has delivered to the Purchaser accurate and complete copies of all pleadings, correspondence, audit response letters and other documents relating to such Proceedings.

Delaware	20-5657551
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification Number)

Common Stock $0.01 par value per share		The NASDAQ Stock Market, Inc
(Title of Class)		(Name of Exchange on Which Registered)

Large Accelerated Filer ¨	Accelerated Filer x
Non-accelerated Filer (Do not check if a smaller reporting company) ¨	Smaller reporting company ¨

		Page
	PART I

Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	10
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Submission of Matters to a Vote of Security Holders	11

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities	12
Item 6.	Selected Financial Data	14
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 8.	Financial Statements and Supplementary Data	23
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	45
Item 9A.	Controls and Procedures	45
Item 9B.	Other Information	45

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	46
Item 11.	Executive Compensation	47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47
Item 13.	Certain Relationships and Related Transactions, and Director Independence	47
Item 14.	Principal Accountant Fees and Services	47

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	48

Signatures and Certifications		51

Term		Definition

ABC		American Bailey Corporation

AIG		Ammonia Injection Grid

CAAA		Clean Air Act Amendments of 1990

CAIR		Clean Air Interstate Rule

CAVR		Clean Air Visibility Rule

CDT		Clean Diesel Technologies, Inc.

CFD		Computational Fluid Dynamics

Common Shares		Shares of the Common Stock of Fuel Tech

Common Stock		Common Stock of Fuel Tech

EPA		Environmental Protection Agency

EPRI		Electric Power Research Institute

FUEL CHEM ®		A trademark used to describe Fuel Tech’s fuel and flue gas treatment processes, including its TIFI™ Targeted In-Furnace Injection™ technology to control slagging, fouling, corrosion and a variety of sulfur trioxide-related issues.

GSG		Graduated Straightening Grid

Investors		The purchasers of Fuel Tech securities pursuant to a Securities Purchase Agreement as of March 23, 1998.

Loan Notes		Nil-coupon, non-redeemable convertible unsecured loan notes of Fuel Tech

NOx		Oxides of nitrogen

NOxOUT CASCADE ®		A trademark used to describe Fuel Tech’s combination of NOxOUT and SCR.

NOxOUT ® Process		A trademark used to describe Fuel Tech’s SNCR process for the reduction of NOx.

NOxOUT-SCR ®		A trademark used to describe Fuel Tech’s direct injection of urea as a catalyst reagent.

NOxOUT ULTRA ®		A trademark used to describe Fuel Tech’s process for generating ammonia for use as SCR reagent.

Rich Reagent Injection Technology (RRI)		An SNCR-type process that broadens the NOx reduction capability of the NOxOUT Process at a cost similar to NOxOUT. RRI can also be applied on a stand-alone basis.

SCR		Selective Catalytic Reduction

SIP Call		State Implementation Plan Regulation

SNCR		Selective Non-Catalytic Reduction

TCI™ Targeted Corrosion Inhibition™		A FUEL CHEM program designed for high-temperature slag and corrosion control, principally in waste-to-energy boilers.

TIFI™ Targeted In-Furnace Injection™		A proprietary technology that enables the precise injection of a chemical reagent into a boiler or furnace as part of a FUEL CHEM program.

2008	High		Low
Fourth Quarter	$	18.95	$	6.05
Third Quarter		24.76		14.52
Second Quarter		27.16		17.55
First Quarter		22.94		14.15

2007	High		Low
Fourth Quarter	$	34.48	$	16.89
Third Quarter		35.85		20.65
Second Quarter		38.20		21.65
First Quarter		29.68		22.54

	For the years ended December 31,
CONSOLIDATED STATEMENT of OPERATIONS DATA	2008		2007		2006		2005		2004
(in thousands of dollars, except for share and per-share data)

Revenues	$	81,074	$	80,297	$	75,115	$	52,928	$	30,832
Cost of sales		44,345		42,471		38,429		27,118		16,566
Selling, general and administrative and other costs and expenses		30,112		27,087		25,953		18,655		14,130
Operating income		6,617		10,739		10,733		7,155		136
Net income		3,602		7,243		6,826		7,588		1,572

Basic income per Common Share	$	0.15	$	0.33	$	0.32	$	0.38	$	0.08
Diluted income per Common Share	$	0.15	$	0.29	$	0.28	$	0.33	$	0.07
Weighted-average basic shares outstanding		23,608,000		22,280,000		21,491,000		20,043,000		19,517,000
Weighted-average diluted shares outstanding		24,590,000		24,720,000		24,187,000		23,066,000		22,155,000

	December 31
CONSOLIDATED BALANCE SHEET DATA	2008		2007		2006		2005		2004

(in thousands of dollars)

Working capital	$	44,346	$	45,143	$	38,715	$	19,590	$	11,292
Total assets		88,873		87,214		65,660		44,075		23,828
Long-term obligations		1,389		1,255		500		448		505
Total liabilities		15,056		23,975		18,005		14,939		4,873
Stockholders' equity (1)		73,817		63,239		47,655		29,136		18,955

Payments due by period in thousands of dollars
Contractual Cash Obligations	Total		Less than 1 year		2-3 years		4-5 years		Thereafter
Operating Leases	$	1,720	$	663	$	527	$	468	$	62

Commitment expiration by period in thousands of dollars
Commercial Commitments	Total		Less than 1 year		2-3 years		4-5 years		Thereafter
Short-term debt	$	2,188	$	2,188	$	-	$	-	$	-

	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Treasury Stock				Nil Coupon Perpetual
	Shares		Amount		Capital			Deficit			Income (Loss)			Shares		Amount		Loan Notes			Total

Balance at January 1, 2006		20,424	$	204	$	91,559		$	(62,870	)	$	(39	)		-	$	-	$	282		$	29,136

Comprehensive income:
Net income									6,826													6,826
Foreign currency translation adjustments												118										118
Comprehensive income																						6,944
Exercise of stock options and warrants		1,662		17		3,809																3,826
Conversion of nil coupon perpetual loan notes into Common Shares		1				5													(5	)		-
Tax benefit from stock compensation expense						5,944																5,944
Stock compensation expense						1,805																1,805
Balance at December 31, 2006		22,087	$	221	$	103,122		$	(56,044	)	$	79			-	$	-	$	277		$	47,655

Comprehensive income:
Net income									7,243													7,243
Foreign currency translation adjustments												87										87
Comprehensive income																						7,330
Exercise of stock options and warrants		322		3		909																912
Conversion of nil coupon perpetual loan notes into Common Shares		1				5													(5	)		-
Effect of FIN 48 adoption									(81	)												(81	)
Tax benefit from stock compensation expense						1,482																1,482
Stock compensation expense						4,791																4,791
Issuance of deferred shares of stock						1,150																1,150
Balance at December 31, 2007		22,410	$	224	$	111,459		$	(48,882	)	$	166			-	$	-	$	272		$	63,239

Comprehensive income:
Net income									3,602													3,602
Foreign currency translation adjustments												21										21
Comprehensive income																						3,623
Exercise of stock options and warrants		1,657		17		602																619
Conversion of nil coupon perpetual loan notes into Common Shares		44				191													(191	)		-
Tax benefit from stock compensation expense						548																548
Stock compensation expense						5,815																5,815
Issuance of deferred shares of stock						73																73
Reclassification of liability award						(100	)															(100	)
Balance at December 31, 2008		24,111	$	241	$	118,588		$	(45,280	)	$	187			-	$	-	$	81		$	73,817

Year	Balance at January 1		Charged to costs and expenses		(Deductions)/Other			Balance at December 31
2006	$	150		-		-		$	150
2007	$	150		-		-		$	150
2008	$	150		-	$	(70	)	$	80

	Amortization
Description of Other Intangible	period	2008			2007
Customer list	3-15 years	$	1,548		$	1,198
Patent asset	10 years		1,170			1,110
Covenant not to compete	5-6 years		336			100
Technologies	3-8 years		603			-
Miscellaneous	3-7 years		390			-
Total cost			4,047		$	2,408
Less accumulated amortization			(1,504	)		(1,320	)
Total net intangible asset value		$	2,543		$	1,088

Description of Property and Equipment	Depreciable life	2008 Cost			2007 Cost
Land		$	1,440		$	1,440
Building	39 years		4,857			4,857
Leasehold Improvements	3-39 years		4,719			-
Field equipment	3-4 years		13,714			10,405
Computer equipment and software	2-3 years		3,527			2,996
Furniture and fixtures	3-10 years		1,823			1,673
Vehicles	3 years		22			22
Total cost		$	30,102		$	21,393
Less accumulated depreciation			(12,587	)		(10,091	)
Total net book value		$	17,515		$	11,302

Year	Balance at January 1		Charged to costs and expenses		(Deductions)/Other		Balance at December 31
2006	$	45	$	215		-	$	260
2007	$	260		-		-	$	260
2008	$	260		-		-	$	260

	2008		2007
Costs incurred on uncompleted contracts	$	18,220	$	17,050
Estimated earnings		14,882		15,247
Earned revenue		33,102		32,296
Less billings to date		(28,773)		(16,303)
Total	$	4,330	$	15,993
Classified as follows:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	5,552	$	16,813
Billings in excess of costs and estimated earnings on uncompleted contracts		(1,223)		(821)
Total	$	4,330	$	15,993

Origin of income (loss) before taxes	2008			2007			2006
United States	$	8,353		$	13,242		$	13,279
Foreign		(1,356	)		(812	)		(1,511	)
Income before taxes	$	6,997		$	12,430		$	11,768

	2008			2007
Deferred tax assets:
Stock compensation expense	$	4,238		$	2,306
Research and development credit		492			1,302
Equipment		-			648
Alternative minimum tax credit		275			275
Warranty reserve		101			176
Accounts receivable		30			57
Vacation accrual		45			40
Deferred rent liability		49			33
Effect of FIN 48 adoption		13			7
Intangible assets		11			-
Net operating loss carryforwards		84			-
Total deferred tax assets		5,338			4,844
Deferred tax liabilities:
Equipment		(975	)		-
Prepaid expenses		(361	)		-
Patents		(94	)		(76	)
Goodwill		(469	)		(367	)
Total deferred tax liabilities		(1,899	)		(443	)
Net deferred tax asset before valuation allowance	$	3,349		$	4,401
Valuation allowances for deferred tax assets		(260	)		(260	)
Net deferred tax asset	$	3,179		$	4,141

Current assets	$	767	$	1,589
Long-term assets		2,412		2,552
Net deferred tax asset	$	3,179	$	4,141

Description	Balance

Balance at January 1, 2008	$	678
Increases in positions taken in a prior period		-
Decreases in positions taken in a prior period		-
Increases in positions taken in a current period		35
Decreases in positions taken in a current period		-
Decreases due to settlements		-
Decreases due to lapse of statute of limitations		-
Balance at December 31, 2008	$	713

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on January 1, 2008		2,464,325		$	15.03
Granted		757,250			18.05
Exercised		(171,125	)		3.61		$	2,106
Expired or forfeited		(145,125	)		18.69
Outstanding on December 31, 2008		2,905,325		$	16.30	7.49 years	$	4,044

Exercisable on December 31, 2008						6.44 years	$	3,798

Options Outstanding							Options Exercisable
Range of		Number of		Weighted- Average Remaining	Weighted- Average		Number of		Weighted- Average
Exercise Prices		Options		Contractual Life	Exercise Price		Options		Exercise Price

$	1.47 - $ 5.51		451,700	4.89 years	$	4.19		446,200	$	4.17
$	5.52 - $ 11.03		536,125	6.40 years	$	7.96		380,250	$	7.56
$	11.04 - $ 22.06		792,000	8.57 years	$	16.19		167,500	$	14.09
$	22.07 - $ 27.57		1,125,500	8.31 years	$	25.22		467,750	$	25.20
$	1.47 - $ 27.57		2,905,325	7.49 years	$	16.30		1,461,700	$	12.92

	Non-Vested Stock Outstanding			Weighted-Average Grant Date Fair Value
Outstanding on January 1, 2008		1,508,500		$	11.08
Granted		757,250			9.65
Released		(682,000	)		10.36
Expired or forfeited		(140,125	)		10.36
Outstanding on December 31, 2008		1,443,625		$	10.75

Year of Payment	Amount
2009	$	663
2010		279
2011		249
2012		251
Thereafter		278

For the year ended December 31, 2008	Air Pollution Control Segment		FUEL CHEM Segment		Other			Total
Revenues from external customers	$	44,393	$	36,681	$	-		$	81,074
Cost of sales		24,365		19,979		1			44,345
Gross margin		20,028		16,702		(1	)		36,729
Selling, general and administrative		-		-		28,012			28,012
Research and development		-		-		2,100			2,100
Operating income (loss)	$	20,028	$	16,702	$	(30,113	)	$	6,617

For the year ended December 31, 2007	Air Pollution Control Segment		FUEL CHEM Segment		Other			Total
Revenues from external customers	$	47,750	$	32,547	$	-		$	80,297
Cost of sales		25,775		16,619		77			42,471
Gross margin		21,975		15,928		(77	)		37,826
Selling, general and administrative		-		-		24,950			24,950
Research and development		-		-		2,137			2,137
Operating income (loss)	$	21,975	$	15,928	$	(27,164	)	$	10,739

For the year ended December 31, 2006	Air Pollution Control Segment		FUEL CHEM Segment		Other			Total
Revenues from external customers	$	46,454	$	28,661	$	-		$	75,115
Cost of sales		26,328		11,932		169			38,429
Gross margin		20,126		16,729		(169	)		36,686
Selling, general and administrative		-		-		23,901			23,901
Research and development		-		-		2,052			2,052
Operating income (loss)	$	20,126	$	16,729	$	(26,122	)	$	10,733

For the years ended December 31	2008		2007		2006

Revenues:
United States	$	68,433	$	67,534	$	57,628
Foreign		12,641		12,763		17,487
	$	81,074	$	80,297	$	75,115

December 31,	2008		2007		2006
Assets:
United States	$	81,241	$	79,132	$	62,190
Foreign		7,632		8,082		3,470
	$	88,873	$	87,214	$	65,660

For the quarters ended:	March 31		June 30		September 30		December 31

2008 (a)
Revenues	$	20,467	$	18,791	$	23,703	$	18,113
Cost of sales		10,669		9,833		13,019		10,824
Net income		1,633		447		2,102		(580	)
Net income (loss) per Common Share:
Basic	$	0.07	$	0.02	$	0.09	$	(0.02	)
Diluted	$	0.07	$	0.02	$	0.09	$	(0.02	)

2007 (b)
Revenues	$	16,262	$	16,210	$	15,246	$	32,579
Cost of sales		8,957		9,083		8,018		16,413
Net income		792		282		927		5,242
Net income per Common Share:
Basic	$	0.04	$	0.01	$	0.04	$	0.23
Diluted	$	0.03	$	0.01	$	0.04	$	0.21

	Management’s Report on Internal Control Over Financial Reporting
	Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
	Report of Independent Registered Public Accounting Firm
	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets as of December 31, 2008 and 2007
	Consolidated Statements of Income for Years Ended December 31, 2008, 2007 and 2006
	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
	Notes to Consolidated Financial Statements

	FUEL TECH, INC.

Date: March 5, 2009	By:	/s/ John F. Norris Jr.
		John F. Norris Jr.
		Chief Executive Officer
		(Principal Executive Officer)

Date: March 5, 2009	By:	/s/ John P. Graham
		John P. Graham
		Chief Financial Officer
		(Principal Financial Officer)

Signature		Title

/s/ Ralph E. Bailey		Executive Chairman and Director
Ralph E. Bailey

/s/ Douglas G. Bailey		Deputy Chairman and Director
Douglas G. Bailey

/s/ Miguel Espinosa		Director
Miguel Espinosa

/s/ Charles W. Grinnell		Director
Charles W. Grinnell

/s/ Thomas L. Jones		Director
Thomas L. Jones

/s/ John D. Morrow		Director
John D. Morrow

/s/ John F. Norris Jr.		Director, President and Chief Executive Officer
John F. Norris Jr.		(Principal Executive Officer)

/s/ Thomas S. Shaw, Jr.		Director
Thomas S. Shaw, Jr.

/s/ Delbert L. Williamson		Director
Delbert L. Williamson

/s/ Ellen T. Albrecht		Vice President and Controller
Ellen T. Albrecht		(Controller)

/s/ John P. Graham		Sr. Vice President, Chief Financial Officer and Treasurer
John P. Graham		(Principal Financial Officer)

If to MMMS:	Martin Marietta Magnesia Specialties, LLC
	195 Chesapeake Plaza, Suite 200
	Baltimore, Maryland 21220
	Attention: President
	(Telecopy: 410/780-5777)

with copies to:	Martin Marietta Materials, Inc.
	2710 Wycliff Road
	Raleigh, North Carolina 27607
	Attention: Senior Vice President and General Counsel
	(Telecopy: 919/783-4535)

If to FT:	Fuel Tech, Inc.
	27601 Bella Vista Pkwy
	Warrenville, Illinois 60555-2299
	Attention: President
	(Telecopy: 630/845-4501)